"3 Things You Should Consider When Negotiating A Management Agreement"

          Okay, so a guy is preparing to manage this new talented artist. Both the guy and the artist have agreed that the guy (the manager) will now be in charge of managing the artist’s entertainment career. Now, what should I do next? (the guy may ask) Remember agreements can be easily said amongst each other, but it is best to get the agreement documented. So, I came up with 3 things everyone should consider when negotiating a management agreement. It does not matter if you are the artist, or the manager this information could be helpful.

#1 - Negotiate the management term.

      When negotiating the term, keep it simple. The term is simply the length of time that both parties will remain in agreement. In an article, Robert A. Celestin from RAC Entertainment Law Firm says, “Typically,the term of an artist management agreement is 3 – 5 years.” The great thing about agreements is that everything can be negotiated. So if one is not sure about the duration of the agreement (term) lasting 3-5 years. It is okay to shorten the term or even enter a probationary period (also known as a trial period). I am personally a fan of trial periods; it allows both parties a chance to test the dynamics of the personal and business relationship. One can also include in the term agreement a benchmark that allows the agreement to be extended if the artist gets a record deal or movie role etc. Always remember to negotiate the term (duration of the agreement) in every management agreement.

#2 - Negotiate the scope of service.

      On YouTube, entertainment attorney Richard Jefferson talks about negotiating the scope of service in a management agreement. Jefferson talks about how it is best to determine the scope of service in the early stages of the management agreement process. When negotiating the scope of service, one is simply asking the question “What exactly are you going to do for me?” The artist is typically the person asking the following question. In the management agreement, it is best to cover what the manager’s managerial duties are. Some managerial duties or the manager’s scope of service in an agreement may state that the manager is responsible for all booking and contractual agreements regarding musical performances. The scope of service could even limit a manager from fulfilling other task that may be beneficial to the artist. For example, if the scope of service in the agreement only allows the manager to manage the artist musical career. The manager has to do just that. By chance if a movie/television role were to be offered to the talent, the manager is unable to negotiate any deals because that was not a scope of service negotiated upon both parties.  The artist may have a talent agent that handles all of the movie/television appearances. So make sure to clarify all of the managerial duties in the agreement. Choosing to negotiate the scope of service helps both parties understand their responsibilities, and it limits any confusion in their agreement.

Last but not least…

#3 - Negotiate the management commission.

      Now on to the following topic everyone loves, and that is money. Whenever there is money involved in anything, it is especially important to have agreements negotiated and documented by both parties. No one wants to be the one getting over or under. That is why negotiating the management commission is a very vital step in the agreement process. “Artist managers get paid a percentage (i.e., a “Management Commission”) of an artist’s gross income earned during the term.” Typically most management percentages range from 10% – 20%. As a helpful tip, determine in the agreement the commissionable activities. When negotiating the commissionable activities both parties are specifying what can be deemed as commission for the manager. This can be helpful to an artist that has already invested time in to their career. For example, if the artist is still gaining income from a previous established business relation. The artist can then negotiate somewhere in the agreement that the manager makes no commission from the established business relation; already set up prior to the management agreement with the manager. Also, both parties should try to agree on hiring a neutral accountant. Hiring a neutral accountant will alleviate money problems regarding expenses and commission cuts. Some may feel talking about money complicates things, but it should not. Negotiating management commission not only protects the artist, but the manager, as well.

     Keep in mind that these are just a few things everyone should consider when negotiating a management agreement. That is to negotiate the term, the scope of service, and the management commission. All considerations could be vital in anyone's next management agreement.

Thanks for reading!

 Jacques C. Louismé